Mumbai (Maharashtra) [India]: The Indian automobile industry is expected to go through a phase of consolidation across all segments in the short term, but long-term growth prospects remain promising for select players, according to a recent analysis by Axis Securities.
Despite facing short-term challenges, the industry has shown resilience, with certain segments maintaining positive momentum.
In the commercial vehicle (CV) segment, domestic dispatches recorded a 3 per cent year-on-year (YoY) decline and a 1 per cent month-on-month (MoM) drop in February 2025. The market was impacted by a high base effect and moderate replacement demand in the medium and heavy commercial vehicle (MHCV) truck segment. Analysts predict a low single-digit decline in CV sales for FY25E, as fleet operators adopt a cautious approach towards capacity expansion amid ongoing economic uncertainties.
On a more positive note, the tractor industry continues to witness strong growth, with domestic sales rising 27 per cent YoY in February, despite a 2 per cent MoM decline. This growth is primarily driven by strong demand from the agricultural sector, rabi sowing activities, improved water levels in reservoirs, and a favorable base effect. Analysts expect the tractor industry to maintain its upward trend in the coming months, supported by these positive factors.
The passenger vehicle (PV) segment registered a modest 2 per cent YoY growth in February, supported by strong performances from leading automakers. Meanwhile, the two-wheeler (2W) market presented a mixed picture, with domestic sales remaining slightly positive as key players reported varied performances across different sub-segments.
Looking forward, the Indian automobile industry is expected to benefit from multiple factors, including a revival in rural demand, new model launches, and the government’s tax relief measures aimed at boosting consumption among the middle class.
Additionally, the implementation of the OBD 2 Phase B norms from April 2025 is anticipated to influence industry trends significantly, with manufacturers closely monitoring regulatory developments and shifts in consumer preferences.
In summary, while the Indian auto sector may face short-term headwinds, its long-term growth outlook remains robust, particularly for select players well-positioned to leverage emerging opportunities.